Last week in the UK, the Pound rose by 0.27% to end the week at $1.3060 as inflation data again exceeded expectations, coming in at a 30-year high of 7.00%, but the news had little effect upon the British Pound.
The US dollar continues to flatten its contenders, boosted by expectations that the Fed will raise interest rates with brute force to tame inflation. Beyond a strong US economy, the storm clouds gathering over Europe and China have also allowed the reserve currency to shine.
The main releases next week will be the Markit PMIs on Friday, which will give traders an early glimpse into how inflationary pressures is evolving and could therefore be important in shaping Fed bets. That said, it’s difficult for market pricing to get even more aggressive, with another nine rate hikes already priced in for this year.
In the UK, the PMIs for April will also hit the markets on Friday alongside retail sales for March. The pound received a boost lately after UK inflation hit the 7% mark, fueling bets that the BoE will slam on the brakes even harder. Overall, though, sterling seems more sensitive to swings in risk sentiment rather than UK developments lately.
Retail sales and private sector PMIs, due out on Friday, will be the key stats of the week. Expect the retail sales and services sector PMI to have the most influence. On Friday, BoE Gov. Bailey is due to speak, with any monetary policy chatter to influence the Pound.
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